Governor Vetoes Measure to Settle Local Tax Dispute

Saying the dispute should be settled locally, Gov. George Deukmejian Monday vetoed a bill that would have ended a years-old Orange County tax-revenue fight in favor of the tiny Yorba Linda Water District.

The north Orange County water agency, which has more than doubled the size of its service area in recent years, has been trying since 1978 to get a larger share of Orange County’s property-tax revenues.

But Orange County officials have contended that the water agency could raise the money it needs by hiking bimonthly service charges to its residential and commercial customers, who pay $5.80 every two months.

Vigorous Lobbying

“The Yorba Linda Water District has the lowest water rate in the county,” Board of Supervisors Chairman Thomas F. Riley wrote in a letter asking Deukmejian to veto the bill by Sen. William Campbell (R-Hacienda Heights).

Although the disputed revenues total only about $150,000 annually, Orange County officials had vigorously lobbied against Campbell’s bill, saying it would create a “troublesome precedent” that could cripple counties, cities and school systems throughout the state.

Because of recent or planned developments, the water district has added approximately 7,000 acres to its service area since Proposition 13, the 1978 tax-slashing initiative.

While it receives a share of county property taxes for 6,000 acres that were within its boundaries before 1978, county officials have steadfastly refused to share tax revenues with the water agency for the newly developed areas.

Campbell’s bill would have given the district the same percentage of tax revenues for its new area as it gets for sections it served before Proposition 13.

County officials say the Legislature has consistently espoused a policy that special service districts meet their expenses for new developments through user fees rather than property taxes.

‘Could Double User Fees’

The district “could easily double its user fees and remain one of the lowest within Orange County,” said lobbyist Dennis Carpenter, who represents the county supervisors in Sacramento.

Campbell was unavailable for comment, and Arthur Korn, assistant manager of the water district, declined to comment on Deukmejian’s veto.

In his veto message, Deukmejian stayed out of the philosophical debate. But the governor said he preferred “that the resolution to this dispute be the result of a mutually agreeable solution at the local level.”

“I do not believe that the state should mandate such a resolution,” Deukmejian said.